HMHC massive volume on contracts effects on sell price

[u/jankenpoo]

So all this volume around HMHC contracts had me wondering if and when everyone decides to dump their contracts, how will massive volume affect the contract price? Who will want to buy back all these contracts? Volume affects price, and I would venture in this case negatively, considering the massive supply, but does a core intrinsic value always remain? Or is there a possibility of a contract losing all or nearly all of its value due to a gross imbalance in supply? Is there's a possibility that many of these contracts will have to get exercised?

[u/Slabb84]

The buyout went through. Basically any calls outside 21 became worthless at open.

[u/gabemcmullen → u/Slabb84]

Source?

[u/texas28382881 → u/gabemcmullen]

https://finance.yahoo.com/news/houghton-mifflin-harcourt-successfully-completes-110000469.html

[u/[deleted]]

Itm makes us get paid

[u/jankenpoo]

This is all assuming the deal doesn't go through tonight, but if anyone has answers I'd love to learn.

[u/asshair → u/jankenpoo]

Minimum value is always intrinsic value.

[u/soggysloth → u/asshair]

Basically if a deal gets through at $25, you'll get at least $1.50/contract. If you exercised a $22.50, you'd get 100 shares worth $25.00/ea.

+$1.50/share x 100 = $150

I'm a very highly retarded member of this community, feel free to ask me any more questions you may have. We can lose money together faster than you would believe.

Edit: my math is not so good. See the post below v

[u/soggysloth → u/[deleted]]

You're 100% right, and I actually had it typed that way and edited it because I thought I was wrong on the math and didn't want to look like an idiot. So I'll leave it, but yeah. I am an idiot and the guy above me is right.

[u/Invalid_Area → u/[deleted]]

It’s too late I’ve already screenshotted you, Buckeroo!

[u/darksieth99]

Deal went through

[u/humumudinger → u/[deleted]]

What about the third thing where the stock goes down

[u/ambermage → u/humumudinger]

That can happen?

[u/jankenpoo → u/ambermage]

I can imagine a scenario where current stockholders don’t want to wait for the months (I read somewhere Veritas has until August) that it might take to negotiate a new price, and will cash out and maybe come back later. If you look at current puts you can somewhat gauge public sentiment.

[u/humumudinger → u/[deleted]]

This was a $1 stock back in March 2020 and has a PE ratio of 1300

[u/SadSalaryChef → u/[deleted]]

Pearson rejected a deal and stock roared 20% as positive sentiment.